Thursday, February 26, 2009
Hedge funds as speculators.
Retail foreign exchange brokers.
There are two types of retail brokers offering the opportunity for speculative trading: retail foreign exchange brokers and market makers. Retail traders (individuals) are a small fraction of this market and may only participate indirectly through brokers or banks. Retail brokers, while largely controlled and regulated by the CFTC and NFA might be subject to foreign exchange scams.[6][7] At present, the NFA and CFTC are imposing stricter requirements, particularly in relation to the amount of Net Capitalization required of its members. As a result many of the smaller, and perhaps questionable brokers are now gone. It is not widely understood that retail brokers and market makers typically trade against their clients and frequently take the other side of their trades. This can often create a potential conflict of interest and give rise to some of the unpleasant experiences some traders have had. A move toward NDD (No Dealing Desk) and STP (Straight Through Processing) has helped to resolve some of these concerns and restore trader confidence, but caution is still advised in ensuring that all is as it is presented.
Wednesday, February 25, 2009
Forex Training In Canada
Forex Chart Tutoriall
Learn To Trade The Forexx
Monday, February 23, 2009
Forex - Electronic Trading
Forex - Investment Management Firms
Forex Training In Canada
Learn To Trade The Forex
Learn To Trade The Forex
Investors learn to trade the Forex find a number of reasons trade for entering the market, some as to trade longer term hedge investors, while others utilize massive credit lines to seek large short term gains. The finally if to price meanders between +1 SD Band and 1 SD Band it learn to trade the Forex is essentially to in a learn to neutral state and we can say that its in "no mans land". There was a period in early 2004 when the Japanese yen was soaring despite a zero-interest policy. Because currencies trade over-the-counter (OTC), via a global electronic network -- in learn to trade the Forex FOREX, what you see is what you get, allowing you to make quick decisions on your trades without having to worry or account for fees that may affect your profit/loss or slippage. This is supposed to discourage imports - and to encourage exports and, in to turn, to reduce trade deficits.
Forex Chart Tutorial
Forex Chart Tutorial
In Football, after a star running back Forex chart tutorial breaks free Forex chart for a 50-yard gain, he comes out of the game temporarily for a breather. Revisions to advanced reports of retail sales can cause significant volatility. Foreign currency futures chart contracts have standard contract sizes, time periods, settlement procedures and are traded on regulated exchanges throughout tutorial the world.
Free Forex Courses
Free Forex Courses
The FOREX plays a vital role in the world economy and there will always be a tremendous free need for the FOREX. Pumping money into the economy is also known courses as "pump priming". Mechanical trading is not without discipline, rather it places free Forex the discipline free Forex onto the wrong part of the trade. Using them to set proper stops when trading double bottoms and double tops - the most frequent price patterns in FX - makes those common trades much free Forex more effective. Let me tell you what is unfairpaying a round turn commission for an option that expires worthless. Changes in the free floating rate will reflect demand and supply.
Sunday, February 22, 2009
forex market
Forex market
Forex market trading systems ... The Forex market was founded in 1971. The main principle of forex is converting one currency into another.
online forex trading
Online Forex Trading
Online Currency Trading News & Analysis ... The forex or Foreign Exchange is a financial market place where you speculate on changes in exchange rates of foreign currencies such as ...
Saturday, February 21, 2009
forex re
Forex Justice - Forex, Reviews, Brokers, Signals, Software, Currency ...
Forex and currency trading are best performed with proper research and tools such as reviews and ratings on brokers, signals, education and software.
www.forexjustice.com
Friday, February 20, 2009
forex risks
There are always risks to FOREX trading, even if your broker is quite reputable. All investments and transactions meet the whole set of risks because of sudden rate changes, changing market conditions and different political events.
Many factors are the reason for these risks. Just a few examples are: the main company's goals; the scheme how these goals are reached; the successful company's administration that guarantees its long functioning and at last ability to oppose any force-majeure with company's own resources.
Other constituents such as - the company's "age", the building in the center of the town, spacious impressive office and the polite staff - are not so important for success. Forex market started functioning quite lately, approximately 20 years ago and since then stands independently from other markets, first of all because it is out of the exchange. Banks made up its primary participants. As communication facilities and automation were developing banks started trading "directly" without any intermediaries such as stock exchanges. Many "classical" financiers criticize and disregard Forex as there's not a single chance of limiting and regulating it legislatively inside one state - from the very start this market became a global phenomenon. However many European and North American banks withdraw their main income in particular from speculative operations on Forex market whereas the number of the staff working in other market sectors is permanently decreasing.
Forex market's broker doesn't need any licenses and certificates for his activity as he is considered to be just a legal person. That's why Forex market on the whole also doesn't run into any "legislative limits" inside countries, and in many states is equated to the games' organization.
So it's important to mention that there are no regulations for Forex market, even despite of great number of complicated problems and risks - such as the risk connected with market prices' changes. Confidence and conscientiousness of carrying out the operations, a lucidity and marketing of Forex brokers are only some of the problems, managed of Forex risks. However, first of all, it's important to know, that broker companies can't operate in a single stock exchange in compliance with all problems and risks, in contrast to quite adaptable exchange markets.
It's absolutely necessary for any FOREX trader to know at least the main rules of technical analysis and reading financial charts, to have experience of studying chart changes and indicators and interpreting of these very charts. This is a certain way of decreasing risk and financial exposure.
However each FOREX transaction should be transmitted using all existing tools specially designed to reduce loss as even the most professional traders can't exactly predict market's future behavior. Many ways to minimize risks when placing an entry order were elaborated. Among them are different types of stop-loss orders. A stop-loss order is a special code of rules explaining how one can leave his position if the currency price amounts to a certain point. A stop loss order is placed below current market price if a person takes the so-called long position and expects the price to go up. On the contrary, stop-loss order is placed above current market price if a person takes the so-called short position and expects the price to go down.
As an example, if you take a short position on USD/CDN it means you expect the US dollar to fall against the Canadian dollar. The quote is USD/CDN 1.2138/43 - you can sell US$1 for 1.2138 CDN dollars or sell 1.2143 CDN dollars for US$1.
You place an order in the following way:
Sell USD: 1 standard lot USD/CDN @ 1.2138 = $121,380 CDN
Pip Value: 1 pip = $10
Stop-Loss: 1.2148
Margin: $1,000 (1%)
You are selling US$100,000 and buying CDN$121,380. Your stop loss order will be executed if the dollar goes above 1.2148, in which case you will lose $100.
However, USD/CDN falls to 1.2118/23. You can now sell $1 US for 1.2118 CDN or sell 1.2123 CDN for $1 US.
Still no existing institution is able to control this market for long on account of the huge volume of FOREX. Whatever you do in the end market forces will still be stronger, making FOREX one of the most open and fair investment opportunities available.
Usually one comes across prices of foreign exchange by FOREX quotes in pairs of currencies where the first currency is the 'base' and the second is the 'quote' currency, for instance: USD/EUR = 0.8419. Here we find out that 1 US dollar costs 0.8419 Euros. Why? The foregoing currency pair "transfers" US dollars (USD) into European Euros (EUR). The base currency always stands in the first place and the second, quote, currency shows the price for one unit of the base currency.
And on the contrary, the pair EUR/USD = 1.1882 clearly indicates that 1 Euro costs 1.1882 US dollars today.
With the help of these quotes it's quite easy to follow the changes in the financial market. If the base currency is becoming stronger, the price of the quote currency rises and this fact indicates that one unit of the base currency will buy more of the quote currency. However, if the base currency loses scores, the quote currency immediately goes down.
Usually one counts FOREX quotes as "demand and supply" - in the so-called "bid" and "ask" prices. The amount of money demanded for the base currency - while selling the quote currency - is called "bid" and the price expected for the base currency - while buying the quote currency - is "ask" price.
How to define in the cross-currency charts which currency - the base or the quote - is on the top and which on the side? If that's the case, the broker should know at least one pair of currencies and which one of the pair values more.
Stop and limit orders will definitely help yon to minimize your Forex risks
Wednesday, February 18, 2009
Forex for Dummies
Forex for Dummies
Forex Basics
If you've already read the "What is Forex?" section then you should know what Forex market is and what it is all about. If not, please, do it. There are five essential aspects of foreign currency market a beginner trader (and an old one as well) should be aware of:
- Forex Fundamental Analysis
- Forex Technical Analysis
- Money Management
- Forex Trading Psychology
- Forex Brokerage
Understanding and mastering these sides of trading are crucial to organize your Forex trading experience.
Forex Fundamental Analysis
Fundamental analysis is the process of market analysis which is done regarding only "real" events and macroeconomic data which is related to the traded currencies. Fundamental analysis is used not only in Forex but can be a part of any financial planning or forecasting. Concepts that are part of Forex fundamental analysis: overnight interest rates, central banks meetings and decisions, any macroeconomic news, global industrial, economical, political and weather news. Fundamental analysis is the most natural way of making Forex market forecasts. In theory, it alone should work perfectly, but in practice it is often used in pair with technical analysis. Recommended e-books on Forex fundamental analysis:
Forex Technical Analysis
Technical analysis is the process of market analysis that relies only on market data numbers - quotes, charts, simple and complex indicators, volume of supply and demand, past market data, etc. The main idea behind Forex technical analysis is the postulate of functional dependence of the future market technical data on the past market technical data. As well as with fundamental analysis, technical analysis is believed to be self-sufficient and you can use only it to successfully trade Forex. In practice, both analysis methods are used. Recommended e-books on Forex fundamental analysis are:
Money Management in Forex
Even if you master every possible method of market analysis and will make very accurate predictions for future Forex market behavior, you won't make any money without a proper money management strategy. Money management in Forex (as well as in other financial markets) is a complex set of rules which you develop to fit your own trading style and amount of money you have for trading. Money management play very important role in getting profits out of Forex; do not underestimate it. To get more information on money management you can read these books:
Forex Trading Psychology
While learning a lot about market analysis and money management is an obvious and necessary step to be a successful Forex traders, you also need to master your emotions to keep your trading performance under strict control of mind and intuition. Controlling your emotions in Forex trading is often a balancing between greed and cautiousness. Almost any known psychology practices and techniques can work for Forex traders to help them keep to their trading strategies rather to their spontaneous emotions. Problems you'll have to deal while being a professional Forex trader:
- Your greed
- Overtrading
- Lack of discipline
- Lack of confidence
- Blind following others' forecasts
These are very professional books on psychology written specially for financial traders:
Forex Brokerage
Every Forex trader like any other professional needs tools to trade. One of these tools, which is vital to be in market, is a Forex broker and specifically for Internet - on-line Forex broker - a company which will provide real-time market information to trader and bring his orders to Forex market. While choosing a right Forex broker things to look for are the following:
- Being a professional company you can trust
- Provide you with real-time quotes
- Execute your orders fast and accurately
- Don't take a lot of commissions
- Support the withdraw/deposit methods that you can use
For beginning Forex traders I recommend these four brokerage companies that are probably the best Forex brokers to start with:
- FXOpen — one of the most popular and progressive brokers with MetaTrader platform and comfortable trading conditions for all kind of traders.
- InstaForex — a reputable MetaTrader 4 brokers, allows Islamic Forex trading accounts, while you can deposit and withdraw money via WebMoney.
- FXcast — good because you can start trading Forex with as little as 10$, use MetaTrader 4 platform and the dozoen of various deposit and withdraw methods, including WebMoney, e-Bullion and wire transfer.
- LiteForex — broker that supports MetaTrader 4 Forex trading platform and doesn't require a lot of money to start with.
Forex Trading System
Forex Trading System: Choosing between Mechanical and Discretionary Systems
There are basically two types of Forex trading systems, mechanical and discretionary systems. The trading signals that come out of mechanical systems are mainly based off technical analysis applied in a systematic way. On the other hand, discretionary systems use experience, intuition or judgment on entries and exits. But which one produces better results? Or more importantly, which one fits better your trading style? These are the answers we will try to answer on this article.
We will first analyze the pros and cons about each system approach.
Mechanical systems
Advantages
This kind of system can be automated and backtested efficiently.
It has very rigid rules. Either, there is a trade or there isn’t.
Mechanical traders are less susceptible to emotions than discretionary traders.
Disadvantages
Most traders backtest Forex trading systems incorrectly. In order to produce accurate results you need tick data.
The Forex market is always changing. The Forex market (and all markets) has a random component. The market conditions may look similar, but they are never the same.
A system that worked successfully the past year doesn’t necessary mean it will work this year.
Discretionary systems
Advantages
Discretionary systems are easily adaptable to new market conditions.
Trading decisions are based on experience.
Traders learn to see which trading signals have higher probability of success.
Disadvantages
They cannot be backtested or automated, since there is always a thought decision to be made.
It takes time to develop the experience required to trade successfully and track trades in a discretionary way.
At early stages this can be dangerous.
Now, which approach is better for Forex traders? The one that fits better your personality. For instance, if you are a trader that finds it hard to follow your trading signals, then you are better off using a mechanical system, where your judgment won’t play an important role in your system. You only take the trades that your system signals.
If the psychological barriers that affect every trader (fear, greed, anger, etc.) puts you in unwanted scenarios, you are also better off trading mechanical systems, because you only need to follow what your system is telling you, go short, go long, close a trade. No other decision has to be made.
On the other hand, if you are a disciplined trader, then you are better off using a discretionary system, because discretionary systems adapt to the market conditions and you are able to change your trading conditions as the market changes. For instance, you have a target of 60 pips on a long trade. But the market suddenly starts trending up pretty strongly, then you could move your target to say 100 pips.
Does it mean that trading a discretionary system has no rules? This is absolutely incorrect. Trading discretionary systems means that once a trader finds his/her setup, the trader then decides what to do. But every trader still needs certain rules that need to be followed, such as the size of the position, conditions that have to be met before thinking to get in the market, and so on.
I am a discretionary trader. The main reason I chose a discretionary system is that my trades are based on price behavior, and as you already know, the price behaves similar to the past, but it is never identical, therefore the outcome of every trade is unknown. However, I do have rigid rules on my system, certain conditions have to be met before I even think in getting in a trade. This keeps me out of trouble, once my setup is present and in accordance with the rules I have set, then I closely watch the price behavior and finally decide whether it is a good opportunity or not.
Whether you choose to be a discretionary or a mechanical trader there are some important points you should take in consideration:
- You need to make sure the Forex trading system you are using totally fits your personality. Otherwise you will find yourself outguessing your system.
- You also need to have some rules and most importantly have the discipline to follow them.
- Take your time to build the perfect system for you. It’s not easy and requires time and hard work, but at the end, if done correctly, it will give you consistent profitable results.
- Before going live, try it on a demo account or even on a small account (I will go for the second option, since psychological barriers will be present).
Choosing the right Forex Broker
Forex Broker: Choosing the right Forex Broker
Sometimes it's hard to make a decision on which Forex broker to open our trading account, there are just too many of them. Most of them have different features, capabilities, weaknesses and advantages, for this reason I have created a checklist that can help you decide the broker to use in your Forex adventure.
1. Is it regulated?
The first question you have to ask yourself is: is the broker I want to use Regulated ? There must be no doubt about this first point. All regulated brokers must submit financial reports to regulatory authorities, and when they fail to do it, authorities have the right to fine them or terminate their membership. This enforces Forex brokers to keep transparent financial reports.
The brokers must be regulated by their local regulatory authorities, for instance, for brokers based in the US , they must be regulated by the NFA (National Futures Association) and CFTC (Commodity Futures Trading Commission), Swiss based brokers must be regulated by the FDF (Swiss Federal Department of Finance) and so on.
Also when a Forex broker is regulated allows investors to dispute any resolution, increasing the investor protection.
2. Trading Conditions
This point refers to the features of the trading platform and the trading conditions with the chosen broker. Amongst the most important factors are:
Spread - Obviously the smaller the spread on currency pairs the better the conditions are for investors and traders.
Platform execution - Trading execution refers to how fast and consistent are the execution of trades. Some brokers guarantee fast and transparent executions during normal market conditions.
Fractional trading - Some brokers allow investors and traders to trade on a fractional basis, instead of trading full lots "100,000 units" or "300,000 units", they allow you to trade "163,345 units" or "325,911 units". This is very helpful for trades risking certain percentage of their balance on each trade.
Safety of funds - We need to make sure our trading funds are kept in a segregated account or at least insured.
forex
Welcome to ForexArticleCollection.com
The Foreign Exchange market, also referred to as the Forex or FX market, is an international exchange market in the world, with a daily average turnover of approximately from 1.5 trillion to 2.5 trillion US dollar. Hundreds of thousands of individuals have already joined the Forex market.
In order to improve your Forex trading skills, you need to make the most of the information at your fingertips.
Here we collect the most popular and helpful Forex articles. All these Forex articles are written by the excellent Forex traders, strategists and analysts. You'll find the articles, trading courses and methods that are an indispensable inherent part of improving your Forex trading strategy.
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Monday, February 16, 2009
trade forex
I've recently received an email from a recently retired businessman who is intending to spend 3 or 4 hours a day trading the forex markets, and just wanted to know which hours of the day are the easiest to make money.
I may have answered this question before on my blog but I thought it was worth another mention anyway. The very best session to make money (on a short-term time frame) is between More on When Is The Best Time Of The Day To Trade Forex?
Saturday, February 14, 2009
trading updates
Well it was a very enjoyable week this week because my main 4 hour trading system generated five decent trading opportunities from the three major pairs that I trade. Therefore I didn't need to resort to some of my other trading systems, which I only really use when the markets are quiet.
forex trading videos
NEw Forex Trainnig Videos
This is a brief post to tell you about two new videos that have been produced recently by the team at Marketclub.
The first video demonstrates how you can trade the forex markets using Marketclub's Trade Triangle technology, and how profitable these signals have been in recent months, and the second video analyzes the USD/JPY and predicts the future direction of this pair in the coming weeks and months:
VIDEO 1 – How To Use Marketclub To Trade The Forex Markets
VIDEO 2 – Analysis Of The USD/JPY Pair
Thursday, February 12, 2009
Is Forex Trading Really For You?
Is Forex Trading Really For You?
The trouble with being a full-time forex trader is that it can be a very lonely profession if you're trading your own account at home.
Everyone thinks it's an exciting, exhilarating profession sitting at your computer in your underwear watching the markets, going long, going short, raking in huge profits, but the reality is somewhat different.
You can sit staring at your computer screen for hours on end waiting for a good set-up to enter a trade, and sometimes you can sit there for the whole day and not enter a trade. And even if you do find a trade, when it goes against you and you have to close out at a loss, then it's a gut-wrenching feeling. You've wasted a whole day, and not only have you not earned any money, but you've actually lost money. You could have made more money working a menial job for the minimum wage that day.
Also in most cases you're all alone and therefore have no work colleagues. You have no social interaction at all during the day except to maybe exchange pleasantries with the postman or to go down to the newsagents for a paper. Over many months and years this lack of social interaction can be quite depressing, especially if you are a naturally social person. Talking to traders on a forum or a load of pretend friends on Facebook is no substitute for real human interaction.
There will also be lean times for even the most profitable traders, which can be extremely stressful, particularly if you have mortgage payments to make, bills to pay, and a family to support.
Yes the potential profits you can make are almost limitless thanks to leverage and compounding, but it's a very tough, and often very stressful way of making a living.
Saying all that though, I've been working for myself since 2001, with forex trading contributing greatly to my overall income and I absolutely love it. Admittedly the lack of social interaction isn't really an issue as I don't really like people generally. 
In all seriousness though, if you can learn to trade successfully then you will be very well rewarded financially, which will allow you to have a great social life away from your computer screen and you can enjoy the benefits of being your own boss and the maker of your own destiny.
For more forex tips and strategies, including full details of my main 4 hour trading strategy, simply sign up to my newsletter by filling in the short form above.
forex new pattern
I have to confess that I don't trade trade the forex markets during important economic announcements and news releases as I've never personally found it to be profitable. However that's not to say that there aren't people who do make decent profits from trading the news.
For those of you who are interested in trading news announcements, I've recently come across what appears to be a very useful site. It shows you what happened to the price of the major currency pairs after previous announcements, so the theory is that you can use this information as a guide to determining how the major pairs are likely to react to forthcoming announcements.
I'm not totally convinced that you can use past price moves to indicate future reactions but it's an interesting site nevertheless. Here's the link so you can check it out yourself:
'Forex Candlesticks Made Easy'.
Candlestick charts are generally regarded as being more effective than bar charts because they can give vital clues as to a currency's future movements. However candlestick charts and indeed candlestick analysis is quite a complex subject which is why I strongly recommend grabbing yourself a copy of 'Forex Candlesticks Made Easy'.
This concise guide will tell you everything you need to know about candlestick charts and patterns. Plus not only will you learn about all the basic candlestick patterns, but you will also learn the advanced highly effective techniques used by many of the top professional traders to make consistent profits from trading.
So whether you know absolutely nothing about candlestick analysis or whether you have a good understanding but want to know how to find the most profitable candlestick patterns, I can highly recommend you check out this excellent guide.
Tuesday, February 10, 2009
Forex Trading Made EZ Review
I was browsing through several forex websites yesterday looking for a potential short-term strategy I could use to compliment my current longer term strategy. Anyway I happened to stumble across a product called Forex Trading Made EZ which was getting a lot of positive comments from people who had purchased the system, so I thought I would buy it myself and see if it was any good.
I have to say that I can see why Forex Trading Made EZ was getting so many rave reviews. It really is a great short-term trading system.
The creator of the system is a man called George Smith who is a retired airline pilot who now spends a few hours a day trading the forex markets with the aim of achieving 20-25 points a day.
He does this by targeting several winning trades of 5 or more points, which when combined gives you this daily target and it seems to work very well. All he does is identify the longer term trend on the 15 minute chart and then takes small chunks out of this trend using the 5 minute and 1 minute charts.
It really is very effective. He favours the EUR/USD pair but I personally prefer trading the GBP/USD pair as it has slightly bigger price moves and have so far had 3 winners out of 3 since yesterday afternoon giving me an overall profit of 26 points after deducting the spread. I've even had success trading the FTSE 100 using this method via my spread betting account.
So if you are looking for a short-term trading system, I can definitely recommend you check out the Forex Trading Made EZ system. When you buy the course, you receive an 80-page ebook and several accompanying videos so it is very simple to learn and despite the fact that is doesn't use many technical indicators, it does seem to be extremely effective and it's certainly a method that I plan on using quite a lot in the future.
If you want to find out more about this Forex Trading Made EZ system, you can do so by clicking here.
Forex Trading Machine Review
Avi Frister's Forex Trading Machine is essentially an ebook package consisting of three profitable forex trading systems that the author uses to great success, and best of all they are all price-driven, which means that no technical analysis is required.
It sounds impressive but can you really be a profitable forex trader using only price as your leading indicator?
Well Avi Frister has spent many years studying hundreds of technical indicators, systems and strategies, and finally came to this exact conclusion, that the only indicator you really need is price.
The 180-page Forex Trading Machine package is basically the result of his studies, and includes three unique strategies that you can use to successfully trade forex currencies. So what are these trading strategies?
Well without wanting to give too much away, they are as follows:
1) Forex Cash Cow Strategy
This is a great strategy for less experienced traders and those who have full-time jobs because it doesn't require you to be constantly watching the market all day, and is completely mechanical. It basically requires a few minutes of your time at the end of the trading day to look for possible set-ups and then place your orders if the criteria are met.
This is more of a long-term strategy as you will have to be patient and wait for suitable entries (you may only get a handful of set-ups per month), but when you do get good set-ups it's proven to be a very profitable method, yielding 100+ pips profit, and is fairly low risk as well.
2) Forex Runner Strategy
If day trading is more your thing then you may well find this method (and the next one) more suitable. This is another mechanical system that again does not use any technical indicators, but this strategy produces far more set-ups.
Indeed I've had great success using this method just trading the GBP/USD pair during the day, and although not perfect (what system is?), it is a profitable system because it keeps your losses to a minimum and aims to produce a far greater profit with each trade.
3) Forex Flip And Go Strategy
Another day trading method, this is arguably my favourite strategy as it aims to produce consistent profits of around 40 pips and limits your losses to around 15 points or less.
It focuses on the EUR/USD pair, and generates profits by taking a slice of the daily trading range of this pair, and takes advantage of the pair's unique behaviour.
So to conclude this review, I should state that this ebook package detailing three profitable forex trading strategies is of course not the holy grail which so many are looking for (it doesn't exist), and you will still incur occasional losses whichever method you use.
However, in the long run, with losses deliberately kept small, each of these strategies should produce consistent profits over time, and the best thing is that you don't have to use any technical analysis at all. Price is the only indicator you will need.
Overall, I can highly recommend this product as each strategy is easy to follow and implement, and more importantly is capable of producing regular profits.
Here's 3 Strategies You Can Use To Trade Forex Breakouts…
One of the most popular methods traders use to trade the markets is breakout trading. This is where you wait for a price consolidation in a tight trading range and take a position when the price breaks out of this range. So with that in mind, here's 3 simple strategies you can use to trade forex breakouts:
1. Price Consolidation
This is the simplest form of breakout trading because it doesn't involve any technical indicators. You simply wait for a period of low volatility where the price is stuck in a very tight range. Then you go long when it breaks upwards out of this range and vice versa.
One way of doing this is by plotting a bar or candlestick chart and waiting until a sequence where you get 1 large bar and 4 subsequent bars that all lie within the initial bar's high and low point. Then you simply wait until the high or low point of the initial larger bar is broken and trade in the same direction.
2. Bollinger Bands
Bollinger bands are also a useful tool for identifying breakout situations. All you do is wait until the outer two lines of the Bollinger Band indicator narrow, and then take a position when one of these lines is breached.
3. Exponential Moving Averages (EMA's)
A method I like to use sometimes involves multiple EMA's, namely the 5, 20, 50 and 200 period EMA's. All you do is wait until all of these indicators are all very close to each other , and then wait for the shorter-term EMA, ie the EMA (5) to lead the breakout one way or the other.
(If you would like details of my main trading strategy, please subscribe to my newsletter by filling in the short form above).
What Are The Different Types Of Technical Indicators?
If you open up any charting package and attempt to put some form of technical indicator alongside the price, you will usually be presented with endless different technical indicators to assist you with your trading.
This can be slightly overwhelming when you first start using technical analysis, because you don't know which indicators are best, what information they are conveying, or how to interpret the data. So in today's article I'm going to briefly discuss the different types of technical indicators available to you.
There are basically four different types of technical indicators:
1. Trend indicators.
These indicators are used to indicate the direction of a trend. These are very useful because the basic rule is that you should always trade with a trend and not against it. Some examples of trend following indicators include Parabolic SAR, MACD and Moving Averages.
2. Momentum indicators.
Momentum or strength indicators are used to indicate the speed or strength of a move in price and are best used to determine a change in direction. They tend to be oscillating indicators showing overbought and oversold positions. Examples include CCI, RSI and Stochastics.
3. Volatility indicators.
These indicators, as the name suggests, show a change in volatility, which often leads to a change in price. Examples include ATR, Bollinger Bands and Envelopes.
4. Volume indicators.
Volume indicators are used to show the volume of trading in a particular currency. These are useful to confirm the direction of a trend or to signal a breakout. For example, if the pair trades in a narrow range and then breaks out on high volume, then this is a very bullish signal. Examples of volume indicators include Chaikin Money Flow, Demand Index and OBV.
The ideal charting set-up should have at least one indicator of each kind, but it's also important to remember that technical analysis is not foolproof. It's there to help you make trading decisions, but no indicator or set of indicators will give you a 100% success rate.
I've only touched on some of the technical indicators in this article and will discuss each one in more depth at a later date.
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What Are The Most Traded Forex Currencies?
If you have a look at the currencies available to trade via your chosen forex broker you will probably come across lots of different currencies you can trade, some of them quite obscure. However most traders ignore a lot of these smaller currency pairs and focus on the most popular pairs as these conform the best to technical analysis as well as having the tightest spreads.
The most popular currencies are the USD, EUR, GBP, JPY, CAD, CHF, AUD and NZD, and the most traded currency pairs are as follows:
- EUR/USD
- USD/JPY
- GBP/USD
- USD/CAD
- AUD/USD
- USD/CHF
- EUR/JPY
- GBP/JPY
I personally only tend to focus on the top three pairs in this list as they give me the most success, although I sometimes trade the GBP/JPY as well. The trick is to find those pairs that give you the most profits from your preferred trading method.
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